C3.ai(US:AI)2025-12-08 22:59Revenue Composition - Subscription revenue accounted for 93% of total revenue for the three months ended October 31, 2025, compared to 86% for the same period in 2024[118]. - Professional services revenue represented 7% of total revenue for the three months ended October 31, 2025, compared to 14% for the same period in 2024[121]. - Approximately 5% of total revenue for the three months ended October 31, 2025, was derived from international customers, compared to 13% in the same period of 2024[166]. Financial Performance - Total revenue for the three months ended October 31, 2025, was $75,147,000, a decrease of $19,191,000 or 20% compared to $94,338,000 in the same period of 2024[185]. - Subscription revenue accounted for 93% of total revenue for the three months ended October 31, 2025, down from 86% in 2024, with a decrease of $10,920,000 or 13% year-over-year[188]. - Professional services revenue decreased by $8,271,000 or 63% for the three months ended October 31, 2025, primarily due to a decrease in prioritized engineering services[190]. - Gross profit for the three months ended October 31, 2025, was $30,380,000, a decline of $27,460,000 or 47% from $57,840,000 in the same period of 2024[194]. - Net loss for the three months ended October 31, 2025, was $104,668,000, compared to a net loss of $65,972,000 in the same period of 2024[185]. Cost and Expenses - Total cost of revenue for the three months ended October 31, 2025, was $44,767,000, an increase of $8,269,000 or 23% compared to $36,498,000 in 2024[192]. - Operating expenses for the three months ended October 31, 2025, totaled $142,493,000, an increase of $9,365,000 or 7% compared to $133,128,000 in 2024[185]. - Operating expenses for the six months ended October 31, 2025, increased by 14% to $293.8 million compared to $257.9 million in the same period last year[197]. - Sales and marketing expenses rose by 12% to $120.9 million for the six months ended October 31, 2025, primarily due to higher payroll costs of $22.7 million[198]. - Research and development expenses increased by 13% to $123.0 million for the six months ended October 31, 2025, mainly due to higher payroll and contractor costs of $14.5 million[199]. Cash Flow and Investments - Free cash flow for the six months ended October 31, 2025, was $(81.2) million, compared to $(32.4) million in the same period last year[206]. - Cash used in operating activities increased by $49.4 million to $(80.0) million for the six months ended October 31, 2025, primarily due to increased payroll and vendor costs[210]. - Net cash provided by investing activities was $10.9 million for the six months ended October 31, 2025, attributed to maturities and sales of marketable securities[211]. - Net cash provided by financing activities was $8.0 million during the six months ended October 31, 2025, due to proceeds from employee stock purchase and stock options[213]. Strategic Initiatives - The company aims to expand into industries such as telecommunications, smart cities, transportation, and healthcare, where it currently has limited presence[140]. - C3 AI launched 28 domain-specific generative AI offerings in early fiscal year 2024, addressing unique industry needs[146]. - C3 AI introduced the C3 AI Agentic Process Automation in September 2025, enhancing automation with minimal human intervention[148]. - The C3 Generative AI Accelerator Program was launched to help organizations implement generative AI solutions effectively, culminating in working prototype applications[150]. - A new global alliance with Microsoft was established in September 2024 to accelerate the adoption of Enterprise AI across all industries[164]. Market and Economic Conditions - The company does not believe inflation has materially affected its business or financial condition[223]. - Significant inflationary pressures could lead to higher employee compensation costs, which may not be fully offset by price increases[223]. - A hypothetical 10% change in foreign currency exchange rates may have a material impact on the company's unaudited condensed financial statements[222]. - The company's consolidated results of operations and cash flows are subject to fluctuations due to changes in foreign currency exchange rates[222]. - The company may face adverse effects in the future due to changes in foreign exchange rates impacting revenue and cash deposits[222]. Management and Organizational Changes - The restructuring of the sales and services organization has had a disruptive effect on financial performance[143]. - The appointment of a new CEO is expected to impact the execution of the company's business strategy[144]. - The average total subscription contract value is decreasing as the company expands its market-partner ecosystem[141]. - The company expects to continue incurring operating losses and may require additional capital to execute strategic initiatives for growth[207]. - Research and development expenses as a percentage of total revenue are expected to decline over the long term as the company benefits from economies of scale[179].